"Contractors do work for other people. Who did he contract with, on this property? Does he have a history of flipping fixer-uppers?"

You don't need to have a history of this; it can be your first project. Everyone starts somewhere.

It's known as "Spec" or Speculative.

And don't confuse GC, General Contractors that do none of their own work and have no crew, and Contractors that work on their own and as Subs = contract to GCs.

It's not unrealistic for anyone in construction to take on a flip. That's part of their industry. The same is true for real estate agents. They come across an opportunity and pursue it.

Here would be an alternative scenario, if you don't feel the flip should be part of the Sched C operations:

He and his wife bought the property personally, intending to Flip it. You want to call this a one-time thing? As investment and not Sched C? Well, if the wife does not typically get involved in the contractor business, then sure. Now you have to execute a contract between the owners and the contractor, of course. The contract then charges his clients as usual.

The couple has basis and improvement costs as personally incurred.

The contractor has more Sched C income for his business, because his customer is paying him to prepare the property for flipping.

And just how many times would you want to run the same dollar around in circles through these people's lives?

And none of the scenarios turns the contractor's personal labor into Cost. "Sweat Equity" increases the Value, or you are doing it wrong. It's not a Cost.